Photo by Karolina Grabowska

The holidays are now in the side-view mirrors, which only means that the monthly credit card statements will start coming in. Hence, you might now be feeling the sting of the holiday splurges.

According to CNBC, about one in three Americans overspend during the holidays, boosting credit card balances. By many measures, 2021 saw a record-spending holiday season despite ongoing supply chain problems, inflation, and a new Covid-19 variant. 

A projection made by the National Retail Federation in 2020 says that holiday sales are on track to grow by 11.5%. And for most shoppers, increasing their spending also meant relying more on credit cards or buy now, pay later financing to spread out their expenses. Although these programs let shoppers break their purchases into equal payments, often interest-free, there could be late fees, deferred interest, or other penalties if you miss a payment.

Making consistent monthly payments on time is crucial to pay off credit card debt. One of your utmost financial goals should be eliminating credit card debt to avoid impacting your overall financial health and credit score.

Check out these tips below to help move beyond the incoming holiday credit card debt.

Four (4) Tips To Pay Off Your Credit Card Debt 

1. Understand Your Credit Card Debt. Step one: To determine your path to pay off credit card debt, you need to understand where you currently stand. Review balances on all credit cards, including each of their interest rates. 

2. Determine a Payment Strategy. There are many standard methods for paying off credit card debt faster. Two typical ways of reducing debt balances include the snowball and avalanche methods.

The Snowball Method is when you make the least payment for each credit card. Then, set aside any additional money remaining on the card with the smallest balance to pay off the card with the minimum balance first. This method encourages people to stay motivated to pay off credit card debt. Acknowledge the small victories of paying off each credit card until the largest is paid off completely.

On the other hand, the Avalanche Method is the opposite of the prior method. This method first focuses on conquering the card balance with the highest interest rate while paying minimum payments on the remaining credit cards. While this method can take a while to feel like you are making progress, you can save more money on interest.

3. Consider Consolidating Debt. Here, you have two options:

a. Balance Transfer Card Alternative. Credit cards often have high-interest rates, meaning you will pay a big nub of cash on high interest instead of toward the debt balance. Another option to save cash when paying off credit card debt is to transfer high-interest credit card balances to a low-interest or no-interest credit card.

You will need to stop using the card for new transactions to be effective. Pay off your debt by the card’s promotional period dates. People should also be aware of transfer fees which may impact the balance amount transferred to the new card.

b. Personal Loan Options. Personal loans traditionally have lower interest rates than credit cards which can help with debt consolidation. While personal loans may be a valid option to pay down debt, additional fees may be associated with the loan. 

Not sure which debt consolidation option would be best for you? Check out the Law Offices of Ronald E. Stadtmueller. Let us schedule a time to meet with you as we have a Get Out of Debt Law Offices in San Diego. You can also call us to discuss your debt or credit card consolidation plans.

4. Discuss Options with Creditors. Discuss options with your credit card issuer to negotiate payment terms or other alternatives to help pay down debt. The discussion could, at the very least, provide lower, more affordable interest rates for better payments.

In Closing

When it comes to Christmas, Americans are the world’s biggest spenders. But 7% of Americans say they will not spend anything on Christmas, including those who do not celebrate the holiday on principle or for religious reasons.

Use these tips to limit the further impact on your overall financial situation and move beyond your incoming holiday debt. To avoid future credit card debt, make it your goal to develop a budget and build your savings throughout the year.

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